Cornyn Open Records Letter Ruling OR99-2658
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John Cornyn

September 22, 1999

Ms. Sara Shiplet Waitt
Senior Associate Commissioner
Legal and Compliance Division
Texas Department of Insurance
P.O. Box 149104
Austin, Texas 78714-9104


Dear Ms. Waitt:

You ask whether certain information is subject to required public disclosure under chapter 552 of the Government Code. Your request was assigned ID# 128451.

The Texas Department of Insurance ("TDI") received a request for "an enclosure of 12 pages from Haag Engineering" referenced in a December 9, 1998 letter to TDI from Zurich Insurance Company. TDI advised that the requested information may implicate the proprietary interests of third parties.(1) Accordingly, this office notified Zurich Insurance Company, Haag Engineering Company, and CNA Insurance Company about the request for information. See Gov't Code 552.305 (permitting interested third party to submit to attorney general reasons why requested information should not be released); Open Records Decision No. 542 (1990) (determining that statutory predecessor to Gov't Code 552.305 permits governmental body to rely on interested third party to raise and explain applicability of exception in Open Records Act in certain circumstances). Haag Engineering ("Haag") responded by claiming that the information at issue is protected under section 552.110 of the Government Code.

Section 552.110 of the Government Code excepts from required public disclosure

[a] trade secret or commercial or financial information obtained from a person and privileged or confidential by statute or judicial decision.

This section protects two categories of information: 1) trade secrets and 2) commercial or financial information.

A "trade secret"

may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives [one] an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers. It differs from other secret information in a business in that it is not simply information as to single or ephemeral events in the conduct of the business, as for example the amount or other terms of a secret bid for a contract or the salary of certain employees. . . . A trade secret is a process or device for continuous use in the operation of the business. Generally it relates to the production of goods, as for example, a machine or formula for the production of an article. It may, however, relate to the sale of goods or to other operations in the business, such as a code for determining discounts, rebates or other concessions in a price list or catalogue, or a list of specialized customers, or a method of bookkeeping or other office management.

Restatement of Torts 757 cmt. b (1939) (emphasis added). See also Hyde Corp. v. Huffines, 314 S.W.2d 763, 776 (Tex. 1958); Open Records Decision Nos. 255 (1980); 232 (1979); 217 (1978).

There are six factors to be assessed in determining whether information qualifies as a trade secret:

1) the extent to which the information is known outside of [the company's] business;

2) the extent to which it is known by employees and others involved in [the company's] business;

3) the extent of measures taken by [the company] to guard the secrecy of the information;

4) the value of the information to [the company] and to [its] competitors;

5) the amount of effort or money expended by [the company] in developing this information; and

6) the ease or difficulty with which the information could be properly acquired or duplicated by others.

Restatement of Torts 757 cmt. b (1939); see also Open Records Decision No. 232 (1979). This office must accept a claim that information is excepted as a trade secret if a prima facie case for exemption is made and no argument is submitted that rebuts the claim as a matter of law. Open Records Decision No. 552 (1990). However, where no evidence of the factors necessary to establish a trade secret claim is made we cannot conclude that section 552.110 applies. Open Records Decision No. 402 (1983). Having reviewed Haag's arguments and the information at issue, we conclude that Haag has not made a prima facie case that the information is protected under the trade secret aspect of section 552.110

In Open Records Decision No. 639 (1996), this office announced that it would follow the federal courts' interpretation of exemption 4 to the federal Freedom of Information Act when applying the second prong of section 552.110 for commercial and financial information. Thus, this office relied on National Parks & Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974), as a judicial decision and applied the standard set out in National Parks to determine whether information is excepted from public disclosure under the commercial and financial prong of section 552.110. However, the Third Court of Appeals recently held that National Parks is not a judicial decision within the meaning of section 552.110. Birnbaum v. Alliance of Am. Insurers, 1999 WL 314976 (Tex. App.-Austin May 20, 1999, no pet. h.).(2) Here, because neither TDI nor Haag has cited to a statute or judicial decision that makes the commercial or financial information privileged or confidential, you may not withhold the requested information under the commercial or financial information prong of section 552.110. Therefore, the information must be released.

Please note, however, that part of the requested information indicates on its face that it is protected by copyright. A custodian of public records must comply with the copyright law and is not required to furnish copies of records that are copyrighted. Attorney General Opinion JM-672 (1987). A governmental body, however, must allow inspection of copyrighted materials unless an exception applies to the information. Again, we have not found that the material at issue here is subject to an exception. Therefore, if the requestor, wishes to make copies of the copyrighted materials, he must be permitted to do so, but without the assistance of TDI. In making copies, the requestor will assume the duty of compliance with the copyright law and the risk of a copyright infringement suit. See Open Records Decision No. 550 (1990).

We are resolving this matter with an informal letter ruling rather than with a published open records decision. This ruling is limited to the particular records at issue under the facts presented to us in this request and should not be relied upon as a previous determination regarding any other records. If you have questions about this ruling, please contact our office.


William Walker
Assistant Attorney General
Open Records Division

Ref: ID# 128451

Encl. Submitted documents

cc: Mr. Jerry Du Terroil
Advanced Long Term Care
121 Interpark, Suite 200
San Antonio, Texas 78216
(w/o enclosures)

Mr. Constantine P. Iordanou
Zurich Insurance Company
1400 American Lane
Schaumburg, Illinois 601-1056
(w/o enclosures)

Mr. Richard F. Herzog, P.E.
Haag Engineering Company
P.O. Box 814245
Dallas, Texas 75381-4245
(w/o enclosures)

Mr. Hentze McKissic
CNA Insurance Company
P.O. Box 219011
Dallas, Texas 75221-9011
(w/o enclosures)



1. Chapter 552 of the Government Code imposes a duty on a governmental body seeking an open records decision pursuant to section 552.301 to submit that request to the attorney general within ten business days after the governmental body's receipt of the request for information. The time limitation found in section 552.301 is an express legislative recognition of the importance of having public information produced in a timely fashion. Hancock v. State Bd. of Ins., 797 S.W.2d 379, 381 (Tex. App.--Austin 1990, no writ). When a request for an open records decision is not made within the time period prescribed by section 552.301, the requested information is presumed to be public. See Gov't Code 552.302. This presumption of openness can only be overcome by a compelling demonstration that the information should not be made public. See, e.g., Open Records Decision No. 150 (1977) (presumption of openness overcome by a showing that the information is made confidential by another source of law or affects third party interests). Here, although TDI failed to request an attorney general decision within ten business days, it is argued that the information at issue implicates a third party's property interests. Therefore, we will consider those arguments.

2. We note that the portion of section 552.110 which addresses "commercial or financial information" was amended in 1999, effective September 1, 1999. Since TDI's request for the decision of this office was made prior to September 1, 1999, the law in effect at the time of its request governs. See, Act of May 25, 1999, 76th Leg., R.S., S.B.1851, 7,36,37.

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